‘Gag this’: NDA dispute rumbles on

Non-disclosure agreements (NDA), or as they are commonly referred to as ‘gagging orders’, are a legal contract between two or more parties used to keep information confidential. These have been used for confidential business purposes for a long time but they have recently come into the spot light for their use in respect of the #MeToo movement.

Generally, NDA’s should not be used to prevent anyone from notifying regulators or law enforcement agencies about reportable misconduct.

At first glance, the recent ruling by the Court of Appeal in the case of ABC and others v Telegraph Media Group (TMG), which upheld a set of NDA and granted an interim injunction which prevents the Daily Telegraph newspaper from publishing details about allegations of inappropriate conduct by a senior business executive towards five employees, appear to go against the above.

In reality this case was slightly different as it was the press rather than the actual people party to the NDA that wanted to make the allegations public.

Initially the High Court refused to grant an interim injunction which would keep the information confidential until a full trial but this was appealed. This was a classic case of freedom of speech v privacy and confidentiality. Some of the main reasons for the CA’s decision were as follows:

• There was a real prospect that the publication would cause substantial and possibly irreversible harm immediately to the executive and the companies.
• It was unlikely that TMG would be able to show that it was in the public interest for the duty of confidence to be breached. There was no evidence that the settlement agreements were reached through harassment or undue pressure on the complainants, they all received independent legal advice, and they had the right to disclosure to regulatory or statutory bodies (which NDA’s really shouldn’t limit).
• It was likely to be established at a trial that the information that the TMG possessed had been through a breach of an NDA
• There is a public benefit and commercial interest to enforcing contracts which have been freely entered into by the parties in order to settle their disputes, including in the field of employment. NDAs will often benefit all the parties to them and, in this case, two of the employees expressly supported the application for an injunction.

The above shows that when entering into NDA’s it is important to consider that they are drafted correctly and only go far enough to cover a legitimate business interest to avoid harm to the company and that there are not restrictions placed in which would stop the parties going to the relevant authorities if needed.